The Indian Corporate Governance Story is slowly drifting or shall we say shifting from Tata-Cyrus to Murthy-Sikka. The heat seem to have subsided from the bitter boardroom battle at Tatas and a fresh one has started brewing at Infosys. In both the instance the shareholders have been affected. In Tatas it was Ratan Tata who had to go through the rough as a majority shareholder and in Infosys, Murthy, the founder himself is waging a battle against Vishal Sikka and the Board as a minority shareholder.

In both the cases, Ratan Tata and Narayan Murthy who are the founder shareholders, who claim to be the protagonists seem to have played a big role in bringing this situation. What went wrong in the last four years …

SUCCESSION PLANNING – CHOOSING THE ANTAGONIST

Cyrus Mistry & Vishal Sikka – Handpicked and Appointed by the Board

From 2012 to 2016, based on the reports it is clear that in both the companies succession planning was a failure. Cyrus who was handpicked to be the successor of a large conglomerate was the homegrown choice who was groomed by Ratan Tata personally from 2006 till 2016. Things went wrong (personal equations) and the mentor decided that his pupil was behaving bad and showed him the door. In this case even though Cyrus and Ratan were insiders; their relationship was that of Dronacharya and Arjuna. The student had to shoot the teacher.

When Cyrus failed? A question that is discussed in academic forums. Should the mentor be blamed for the acts of the mentee? Who failed in this case was it Ratan or Cyrus? Why are the shareholders not blaming the mentor or the protagonist?

In the case of Vishal, everyone lauded the appointment, including Murthy. It is said that the most celebrated board members handpicked Vishal but the appointment was made in a hurry due to a leadership crisis at Infosys. Vishal responded to the various praises showered by industry leaders and Murthy by saying he was like Ekalavya who learnt the leadership style from Dronacharya in absentia. Sikka was an adopted student in the Murthy Gurukul. Today to blame an outsider who was appointed as a CEO by the insider leaves us with a question – who is to be blamed?

Why are the shareholders not blaming the appointee – the protagonist and the board for choosing a wrong candidate?

Succession planning – It is not clear whether a successor from inside or outsideis better .

Career moves – Value creators and Values Protectors

Cyrus started the journey in 2012 and Vishal in 2013. Both were given the mandate that value creation should not be compromised at the cost of values protection in the companies. Incidentally, the younger generation are never trusted with the concept of creating values; they are given the mandate to protect existing values. At the time of passing the mantle, the founders of these companies were very confident that the value of these companies was too big for it to be destroyed by these young CEO’s.